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THE LIBRARY 

OF 

THE UNIVERSITY 

OF CALIFORNIA 

LOS ANGELES 



THE 

CUSTOMS UNION 
QUESTION 



W. PEART-ROBINSON 



LONDON 
KEGAN PAUL, TRENCH, TRUBNER & CO. Ltd. 



THE CUSTOMS UNION 
QUESTION 



THE CUSTOMS UNION 
QUESTION 



W. PEART-ROBINSON 



LONDON 

KEGAN PAUL, TRENCH, TRUBNER & CO. Ltd. 

Patebkostee HorsEj Chaeing Ceoss Road 

1896 




>!/ 






AN IMPERIAL CUSTOMS UNION FOR 
THE BRITISH EMPIRE. 



I. Reasons for the Commercial Federation of 



>- 

^ the Empire. 



I know of no subject which even approaches in 

importance this question of Fiscal Reform, or in 

other words, the terms upon which we shall do our 

iivast import and export trade with our Colonies and 

foreign nations. And yet there is no question which 

^is so little discussed among us. I remember the 

ua time when it was sufficient to utter the watchword 

' Free Trade in order to scare away all argument. 

That time has passed away, and a more intelligent 

and temperate attitude is being assumed toAvards 

this momentous question. 

The reasons for this more tolerant attitude are 
c3 not far to seek. For whereas the fact that we were' 

t first in the field in manufacturing when the great 
discovery of steam was applied to the railway and the 



.'584687 



( 2 ) 

different industries enabled us to have a monopoly 
of the world's productions, now not only have we 
enormously increased competition to contend with at 
home, but our former customers have become our 
competitors abroad and in our Colonies. Hence, 
instead of the conditions being abundance of employ- 
ment, with only the desire of cheap food to make the 
price which we could fix for our manufactures buy as 
much as possible — instead of this state of things, we 
are face to face with very different conditions, i.e. 
every possible commodity, food or otherwise (thanks 
to free imports or unrestricted competition in our 
markets), cheaper than has ever been kno"\vn in the 
history of the world, but a dangerously large number 
of the community unemployed and unable to profit 
by this cheapness, so that practically the condition of 
things under which we adopted Free Trade with 
such temporary success has been entirely reversed. 
Instead of unlimited employment with dear food, 
we find ourselves confronted with unlimited cheap 
food but lack of employment, so that we have the 
anomaly of people starving in the midst of plenty. 
These changed conditions have naturally caused 
thoughtful men who were not disposed to accept a 
name or worship a fetish to carefully inquire into 
the conditions which have In'ought about this change, 
and as the Free Trade party hit upon the medicine 
that was most salutary for the condition of the 
patient when he was some years younger, to en- 
deavour to find a prescription which will suit his 
present state of health ; ibr Avhcreas he was then 



( 3 ) 

suffering from the expensiveness of the commodities 
and means of life, he is now suffering from lack 
of employment. 

There is a second complaint under which this 
country is suffering severely, which has also con- 
tributed very materially to the reconsideration of 
this question ; that is, the straits into which our 
greatest industry, agriculture, has been driven by 
having its profits reduced to zero through foreign 
untaxed competition, whilst still having to bear the 
brunt of increasing imperial taxation, which it was 
well able to do under a system of Protection, but 
which under present conditions it cannot support. 

Besides, there is another and very important 
aspect of this question. I mean the folly of becoming 
dependent upon foreign nations for our food supply. 
What is the result of this ? We are forced to send 
them our manufactures in return, but they put a fine 
on these manufactures in the form of an import tax. 
AVhat is the result ? That our people have to work 
harder for their bread and food supplies than they 
ought to do. This is one of the things which we 
advocates of the Customs Union wish to remedy, by 
getting back our bargaining power through the 
institution of a differential tariff, and by the diverting 
of our food supplies to our Colonies, where within the 
Union no fine Avill be imposed. 

But there is one matter which it is absolutely 
necessary to make perfectly clear at the outset — the 
objection that it is the foreign consumer that pays 
the tax, not the English producer. 

B 2 



( -t ) 

Now this is one of those half-truths which are so 
apt to mislead. 

The fact is this : that the additional cost of an 
article OAving to an import duty exists and is paid by 
the producer when there is no competition. It was, 
therefore, true of our manufactures at the time 
when Cobden enunciated it, at the time when we 
held the monopoly of railways and labour-saving 
steam industries ; but where there is competition such 
as we now encounter wherever we send our goods, 
the differentiated taxation which we meet every- 
where acts as a fine upon our goods. And seeing us 
gifted with a most supreme simplicity in granting the 
boon of free ingress to foreign nations uncondition- 
ally for their goods, they are at no pains to court our 
good-will by giving us better terms than other 
nations, and so invariably give us the worst ; with 
the result that our goods, if they are to compete with 
foreign productions, must accept a lower price by 
tlie amount that the duty on them is higher than 
that on the goods of those nations who by giving 
blow for blow have won for their working classes and 
manufacturers more favourable terms for their goods 
in the markets of the Avorld. This is what I mean 
by saying that the Customs Union will give us back 
oiu' Ijargaining poAver. In a word, Avhether the con- 
sumer pays so much more for the goods by the 
amount of the import tax depends ui>on who has 
command of the market and can dictate the price. If 
the price is dictated by our competitors, then we 
have to accept tli.it price^ and deduct the import duty 



( 5 ) 

from the actual amount we get for our goods ; and 
by placing similar import duties on the goods of 
foreign nations where those goods have not a mono- 
poly in our market, we should force them to come 
down in the exchange price they receive for their 
goods by the amount of the tax. If, however, we 
made the tax too heavy it would preclude them from 
competing. 

Of course, a blind and pig-headed policy in regard 
to Protection would be infinitely more injurious to 
the country than is now our blind and undiscrimi- 
nating adhesion to Free Trada in the guise of free 
imports ; for were we to retrograde back to the un- 
bending policy of Protection which prevailed before 
the inauguration of our Free Trade policy and tax all 
foreign products, especially food coming into this 
country, we should very seriously cripple our enor- 
mous foreign trade, for by raising tlie cost of livin"- 
and of the raw materials for our manufactures we 
should place ourselves at a disadvantage in the 
competition in foreign markets for the world's trade. 
But such a retrograde policy is the very reverse of 
what is here advocated. I propose to strike a mean, 
avoiding the extravagance of the apostles of either 
policy. 

I propose to discriminate between goods which 
pay imperial taxes and those which do not, and 
between the goods of those countries who offer us a 
fair exchange in their markets, and those who deny 
us this benefi.t. I say at once that blind, uncom- 
promising Protection, the taxing of all imports into 



( ) 

England, would be the rankest folly, but that, avoid- 
ing extremes, it is possible to formulate a wise and 
well-considered scheme by which we may make use 
to our own advantage as a nation of that weapon 
which other nations use with such effect, and by a 
Customs Union secure the following points : — 

1. To get back our bargaining power, and thereby 
be able to demand for ourselves fair and equal terms 
for our trade from those nations, like France, 
America, and Germany, who gain such an inestim- 
able benefit to their workers by the free and untaxed 
admission of their goods into our markets, and 
thereby do away with or diminish the fine which is 
laid on our goods on their entrance into foreign 
markets, and win more free trade for ourselves. 

2. By giving a preference to the goods of our 
colonists, who are our kith and kin, not only receive 
from them in return a like advantage in their 
market, but also draw nearer those ties of kinship 
by the most enduring bond of common interest. 

But the undiscriminating attitude of Free Trade 
refuses to see any difference between buying goods 
Avhich pay imperial taxation and those which pay 
none. It enunciates parrot-like, sententiously, these 
awful words, "The duty is a tax," and the trite maxim, 
" Buy in the cheapest and sell in the dearest market." 

But what is cheapness ? And what is a tax ? 

Taxes, though an evil, are a necessary evil, and 
direct taxes are just as onerous, and in many cases 
more so than indirect ; witness the fact that the great 
obstacle to an Imperial Free Trade Customs Union 



( 7 ) 

is the fact that our Colonies find indirect taxation 
a necessary expedient for raising their revenue. 
Direct taxation alone would not be tolerated. 

And now with regard to cheapness : let us take, 
for instance, two pianos, the one made by Messrs. 
Broadwood, of London, and the other by Messrs. 
Steinway, of New York. Free Trade teaches that 
if Messrs. Steinway's piano of same quality can be 
brouo;ht tax-free to London and sold there for a 
sovereign less than Messrs. Broad wood's, it is cheaper. 
This is, however, a gigantic fallacy, because we have 
put a tax on Messrs. Broadwood's piano works 
beyond what those works |)ay in rates for school 
board, poor-rate, paving and all municipal expenses, 
and beyond the consideration of how much the 
money paid by the English firm to English workmen 
enables those men not only to live and support their 
families, but also to j)ay rates and taxes, support our 
armies and civil expenses, and give custom to all 
other industries existing amongst us. This is the 
Trades Union aspect of the question, and is the 
reason why the great industrial centres are begin- 
ning to demand a reconsideration of our unique and 
extreme attitude with regard to Free Trade. 

How terrible and corroding a fallacy is also the 
idea that everything should be sacrificed to building 
up a mammoth foreign trade, since home trade is 
many times more valuable. " But free-traders 
somehow can never be made to see that if pro- 
tectionist countries lose in foreign trade, they on the 
other hand increase their home trade by double the 



( 8 ) 

amount, so that they are not losers but gainers, that 
is, if the articles shut out can be made at home. 
Let me illustrate this in a very remarkable case. 
Let us suppose that England imports a hundred 
millions of food (the real figures are about one hun- 
dred and forty), and pays the food bill with the like 
amount of manufactures, this would give her two 
hundred millions of foreign trade. France, on the 
contrary, puts a duty on and shuts it out, and pro- 
duces her food at home, and her farm-ers exchange it 
for home manufactures. Now let us examine this 
position. England has apparently two hundred 
millions of foreign trade, but only one hundred 
millions, or half the amount, is English, as the 
foreigner has all the benefit derived from producing 
the food; whereas France, producing her own food, 
has two hundred millions of home trade, every 
shilling French. Cobdenites never cease boasting of 
the vast foreign trade of England ; France nowhere, 
the rest of the world nowhere. But the question is, 
does it conduce to the prosperity and, above all, to 
the safety of the Empire ? I say distinctly no, and 
it may any day be our utter ruin. FiTince could 
have just as great a foreign trade, provided she 
would l)e willing to pay the same price, ruin her 
agricultural industries, and import her food instead 
of growing it — but she is far too wise." ^ 

Such is briefly the sanction or justification of the 
institution of an Imperial Customs Union. Now we 

^ Quoted from Lord Masham's letter in Pall Mall Gazette 
of October 3rd, 1895. 



( 9 ) 

come to the very definite consideration of wliat form 
is that Customs Union to take, and what will be the 
exact provisions of the measure ? 

II. Suggestions for Commercial Federation. 

Firstly, the object which I put before us is Imperial 
Free Trade. Free Trade within the protected area 
of our Empire. This I know and confess is at the 
present moment unrealizable, but this is the object or 
ideal which we must aim at. 

Secondly, What is the first step, and what is now 
feasible ? Preferential trading with our Colonies, that 
is to say, that we should give to subjects of her 
Majesty living in the Colonies, paying imperial taxa- 
tion, a preference for those goods which they send 
into the mother country over foreign nations, our 
rivals in commerce and in war. But here comes a 
most important point and a most necessary reserva- 
tion. The raw materials used in our industries must 
in no case be taxed, otherwise we should be en- 
dangering our vast foreign trade by making ourselves 
less able to compete in those markets. 

What is it that stands between the very solid 
advantage to be gained by the fulfilment of the 
mutually expressed desire of the Colonies and the 
mother country for a closer commercial and political 
union ? 

It is the ghost of Free Trade. 

It is an idea. 

Each desires the Union. But the old country is 



( 10 ) 

still under the spell of past associations linked to 
Free Trade. 

The new countries, the Colonies, are with all other 
countries disillusioned from this dream. 

All that is needed is a ofive and take arrano-ement. 
Tliat each should for the sake of a great practical 
benefit be ready to make some concession in abstract 
theory. 

It is surely monstrous that when the children of 
the Empire ask the parent State for the bread of 
commercial recognition that they should give them a 
stone of out-of-date political economy dogma. 

It was the Avisdom of the greatest rulers the world 
has ever known to build up that mighty fabric of 
the Roman Empire by the granting of special com- 
mercial privileges to those cities which they wished 
to bind politically to themselves. 

And what is the objection to this revision of our 
existing Customs duties ? 

Is it the raising of revenue by means of Customs 
duties ? We do this already to the tune of 1 9 
millions annually. 

Is it the fear lest the incidence of the proposed 
taxation should fall more heavily on the working 
class? This is not so. Every working man is a 
producer before he is a consumer. 

Is it the reluctance to tax articles of food ? 

If so, why is the present duty on tea tolerated, 
which is useless to benefit our producing industries, 
whilst it enhances the cost of living ? 



( 11 ) 

Ts it a fear that our producing industries, the 
actual source of the wealth of the community, miglit 
get some advantage from the imposition of Customs 
duties on competing instead of non-competing in- 
dustries ? 

Why this sentimental fear of doing any dis- 
advantage to foreign industries, and cynical disregard 
of British trade interests ? 

Cobden and Bright were idealists. Their concep- 
tions were beautiful and noble. Their advocacy of 
universal peace, as represented by the Peace Society, 
must be taken into consideration in relation to their 
views on Free Trade. Given the acceptance of the 
doctrines of the Peace Society — all nations one family, 
all quarrels amicably settled by arbitration without 
recourse to the arbitrament of the sword — in other 
words, universal disarmament, then and only then 
would real Free Trade be a practical possibility. 
But until then the one is, as the other, only a pious 
aspiration. 

For the consideration of this subject it seems to 
me that perhaps, more than any other, we require to 
divest our minds of what Bacon calls the " fallacy of 
names." The mind requires to be a tabula rasa, able 
to accept ideas free of prejudice ! Now the word 
" protection " to some people at once means some- 
thing bad, before they have listened to any argument 
or allowed themselves to weigh what can be said. 
But protection, when applied to the military defence 
of our Empire, seems a good thing ; and protection 



( 12 ) 

when applied to Labour is a thing which the work- 
men of this country have accepted as an article of 
faith, and which no sane man would now attempt 
for good or bad ever to eradicate from his mind. 
But when the word " protection " is applied to our 
trade, for some reason or other the majority of people 
are unwilling to reasonably consider it. Yet the 
protection of trade is a good object if it can be 
shoA\Ta that it can be gained without any outweighing 
disadvantage. And at the outset I cannot for one 
moment admit that if the capital indictment (as it 
appears to some minds) of Protection could be 
brought home to my proposals it would prove them 
harmful. I go further, and say it is useless to be at 
an enormous expense in protecting our trade by 
ships and men, and in developing huge tracts of 
country which entail still further expense in military 
armaments for their defence, if we do not protect 
or defend that trade which is the object of our 
incurring these responsibilities, and which is the 
mainspring of our existence as a trading com- 
munity. If we cannot protect and defend our 
trade from being taken from us by foreign nations, 
our very existence as a nation is threatened, as I 
shall explain when I come to the imperial aspect of 
the question. 

I therefore submit that it is desirable for us to 
give a preference to goods made within the EmjDire, 
and to mulct unpatriotic consumption, with the intent 
to educate John Bull, the consumer, that he is richer 
by consuming what he, John Bull, as producer 



( 13 ) 

makes, instead of paying an outsider to make it for 
him. 

How can we do this ? Of course we shall have 
the bugbear of the big and little loaf hurled at us. 

But in relation to this obsolete piece of party 
stock-in-trade, which was applicable enough to the 
question of the repeal of the Corn Laws under Sir 
R. Peel, but which has no more point in reference to 
my present suggestion than it would to the Avritings 
of S. Anselm or the Monroe Doctrine, I do not 
think I can do better than quote a passage from the 
Preface of a series of Letters published by Mr. Wm. 
Farrer Ecroyd, the most distinguished pioneer of 
this movement : — 

" Working men are proving their ability to 
understand the diiFerence between the former pro- 
tectionist duty of 20s. to 30s. ^er quarter on wheat 
levied for the purpose of raising rents, and the 
differential duty of 4.s'. per quarter now proposed only 
for the purpose of transferring our food-growing 
from those who will not buy our manufactures to 
those who will. They see that the latter Avould soon 
bring them a new supply of duty-free food from our 
own Colonies which would probably compel the 
Americans to accept As. per quarter less in order to 
neutralize the duty which thus would never raise the 
price in England at all ; and what is far more im- 
portant, would bring them good custom in return for 
that food which would increase employment and sus- 
tain wages. The well-worn cry of the big and little 
loaf has therefore lost its power, since they see that 



( It ) 

there are duties aimed against the -working man and 
duties to be used for his defence ; and that reason 
and common sense can distinguish between the two." 

In view, however, of the historic associations of 
the Anti-Corn Law agitation, it would perhaps be 
inexpedient to weight a measure of so much joromise 
to Imperial Unity with the opposition which it would 
encounter from prejudice were it associated with the 
proposal of any tax on wheat. But in the articles 
at present subject to Customs duty, such as tea, coffee, 
tobacco, wines, etc., we could give a preference to the 
Colonies, x^nd, if necessary, as a quid pro quo, we 
could further extend this preference to Colonial meat 
and livestock ; or if objection were felt to increasing 
Customs duties, an equivalent might be found in the 
amount paid by us for the common Defence of the 
Empire, 

The Colonies in return might give us a preference 
over foreign countries in their markets. They cannot 
afford to abolish indirect taxation, as they could not 
yet raise the necessary revenue by direct taxation. 
They must therefore have duties on imports, and as 
their imports are almost exclusively British, they would 
lose almost all their revenue were they to allow our 
goods in duty free. But if they would lower tlie 
duty on our goods and correspondingly increase that 
on goods of foreign origin we should as effectually 
retain our hold on the Colonial markets. Of course 
at present our manufactures have no competition in 
the C(jlonics from goods made there ; but if, as Avill 
probably iKipjJcn in the lapse of time, manufactures 



( 15 ) 

grow in those Colonies, Ave shall have to ask, as we 
have done in Lancashire, for a corresponding excise 
duty to counterbalance the import duty, otherwise 
that duty would become protective against Great 
Britain. 

The next question is, what is to be the arrange- 
ment between our Colonies for intercolonial trade 
within the Imperial Customs Union ? So far as this 
is concerned, I do not think we in Great Britain need 
trouble ourselves about it. I think we could fairly 
leave it to the different Colonies to make their own 
Customs arrangements with one another ; recom- 
mending, of course, a j^olicy of giving a preference to 
intercolonial trade over foreign, but leaving them a 
free hand in respect to their arrangements with one 
another, only stipulating that they should not give 
more favourable terms to any Colony than they did 
to the mother country, otherwise this w^ould act as 
protection against ourselves. Their arrangements 
as to tax on foreign imports would, of course, be 
regulated by their tariff with us as above explained. 

Such is briefly my proposal for the outline of an 
Imperial Customs Union. It is not what I should like 
it to be, a Customs Union on the basis of free trade 
within the Empire, but it is in my judgment the 
nearest we can attain to it at present. I put this 
Imperial Free Trade before me as an ideal. 

But on earth we must content ourselves with what 
is feasible and attainable, and cease crying for the 
moon, or losing solid advantages in the obstinate 
adherence to an abstract theory. 



( 16 ) 

And now that I have unfolded my scheme, I shall 
endeavour to show how this scheme will be beneficial 
to this country and the Empire. 

III. Advantages Claimed for the Scheme. 

First of all, I will look at it from the point of vieAV 
of the working classes. A working man said to me 
the other day, arguing against Protection, " The 
working classes are better off now than they were 
under the Corn Laws. It is not to our interests 
therefore to return to Protection." That remark is, 
I think, abundantly answered by the above quotation 
from Mr. Ecroyd's pamphlet. 

Protection has never been tried in this country 
under a democratic suifrage such as it exists under in 
Germany, France, and the United States, and it is a 
noteworthy fact how those pro-tectionist nations are 
catching us up in spite of the start we had of them. 
And that poverty of the British workman previous 
to the Repeal of the Corn Laws in comparison with 
his present condition, is not to be wondered at if one 
reflects that it would have been a strange thing if the 
marvellous discoveries of steam and electricity in con- 
nection with railways and manufactories had not in 
some way ameliorated his lot, through the enormous 
labour-saving and wealth-producing aspects of these 
inventions. 

And our working classes and their powerful 
organizations must sooner or later awake to the fact 
that they are having the bread taken out of their 



( 17 ) 

mouths by the woi-kmen of foreign countries, and call 
out for more equal conditions. The English work- 
men possess only one free market, and that is England, 
but this one free market is absolutely packed with 
goods manufactured abroad. The conditions are 
unequal, for the foreign workmen and firms have a 
preserve of their own (their home markets) which 
gives them a sure demand, enabling them to produce 
on a very large scale and send the surplusage over 
here to sell at any price. Our o^wn people, on the 
other hand, with foreign markets closed against them 
or subject to heavy duties, cannot even do themselves 
justice in the home market. 

The present policy of free imports in the face of 
hostile tariffs abroad is therefore in direct anta2:onism 
to the aims of our great labour organizations. Trades 
unionism, which must now be recognized as an accom- 
plished fact, and a very powerful factor in determin- 
ing all public policy in connection with trade, has for 
its aim to keep up the wages artificially to ensure at 
least the living wage. This is common sense and 
common expediency, and not facile acceptance of 
the abstract and unfounded-upon-practice theories 
enunciated by Regius Professors in their class- 
rooms. This practical standpoint accepts man as a 
human being and not as a greed machine, to turn out 
mechanically so much wealth for the capitalist. 

Hence the more modern and enlightened school of 
political economists recognize that political economy 
as a science must be taken in conjunction and rela- 
tion to its sister science, with which it is closely 





( 18 ) 

wrapped up — Social Science. The instinct of nation- 
ality prompts nations, the desire to protect labour 
and ensure a living wage prompts trades unions, to 
repudiate Free Trade. Since we cannot stamp out 
nationality, and must sympathize with trades union 
aims to raise the standard of comfort of the work- 
ino- classes, Free Trade within the Empire, and a 
differential tariff for outsiders, is the policy which 
the patriotic instinct of national preservation 
and the desire for the progress in prosperity of 
our toiling millions points out to us as the most 
expedient. 

I Avill just illustrate what I call for clearness the 
trades union aspect of the question by one illus- 
tration, and then pass on to the aspect of national 
preservation. 

Extract from Lord Masham's letter to the Times, 
dated Oct. 19th, 1895 :— 

'' Suppose that foreign iron girders could be de- 
livered in England at, say, Al. per ton, but that 
similar girders would cost the British maker 4/. 10s. 
Under such conditions the British iron girder trade 
would either have to collapse or it must be protected. 
Let us now consider wliat the nation would gain in 
this case by protection — probably four times as much 
as the consumer Avould lose. Consider well the vast 
amount of capital and labour employed in jDroducing 
that girder. Look at the vast sums and the labour 
expended upon iron mines, coal mines, blast fur- 
naces, &c. What is the loss to the consumer? A 
mere bagatelle in comparison to the destruction of 



( 10 ) 

such a trade by free imports. And then again, l)y 
producing the girder at home instead of importing it, 
you provide double employment both for capital and 
labour, as the British girder would be exchanged for 
' something else ' exactly the same as if it had been 
made abroad. Consider well the enormous amount 
of capital and labour expended in obtaining the 
crude ore from the bowels of the earth, and also the 
coal necessary to smelt and manufacture it, and the 
serious outlay in blast furnaces, and the vast sums 
paid in wages in all these operations, and the traffic 
gain to the railways, and also the profits of the shop- 
keepers and all the subsidiary trades that depend 
upon the iron industry. All these things are vastly 
more profitable and of far greater importance to the 
nation than a trifling saving in cost to the con- 
sumer. 

" Let me now explain the difference between wise 
protection and unwise, taken from my pamphlet 
published in 1892. 

" For illustration, suppose we take a piece of 
Bradford soft goods. The wool comes from Australia, 
is British-grown, and carried in British steamers. 
It is warehoused in London, is sold at auction, and 
forwarded to Bradford, where it is sorted by the 
wool merchant, combed and spun, then manufactured, 
and finally dyed and finished for the merchant. 
Now it is evident that there must be a large national 
gain in all these operations, both in capital and 
labour, to subsidiary trades, such as coal, iron, soap, 
leather, wood, dyewares, &c., &c., consumed in its 

n ^ 



( 20 ) 

manufacture, and also the shopkeepers' profits de- 
rived from the wages earned by the operatives. 
Should 1 be wrong in estimating the national advan- 
tage or gain at 20 per cent. ? It is probably much 
more. Now comes the whole important question. 
Is it for the national advantage and general pros- 
perity to allow this industry to be destroyed because 
French goods can be imported 5 per cent, cheaper ? 
It appears to me, as a man of business, that it is not 
the way to get rich, to lose 20 per cent, to gain 
5 per cent., but that is what we are doing to the 
extent of millions. The consumer, by buying French 
goods, saves 5 per cent., but the Bradford producer 
loses 20 per cent. I again ask, is not production the 
source of all wealth ? 

" The real point to be considered, from a national 
point of view, is whether the duty enhances the 
price to the consumer in a greater ratio than the 
united gains (and other advantages) of aU the pro- 
ducers ? If not, the nation must gain. If the duty 
Avere fixed at, say, 20 per cent., any increase of price 
up to that point paid by the consumer would be no 
national loss, as it would be more than gained by the 
great army of producers. Now this is not protec- 
tion, but wise production. But if you fix your duty 
beyond 20 per cent., that would be unwise protec- 
tion, because then the price might be enhanced 
l)eyond the possible gains of the producers, and so 
the nation might lose to that extent. Therefore, 
the rule should Ix; in all cases to fix the duty at 
;il)out A\]i;it iiiiglil. nil a liberal estimate, be con- 



( 21 ) 

sidered the gain and national advantage to the great 
army of producers. 

" America, and most other nations, fix their scale 
of duties so high that the loss to the nation must be 
enormous. They make as great a mistake in having 
their duty too high as England does in having none 
at all." 

Protection of trade logically follows from the ac- 
ceptance of trades unionism, which is the protection 
of labour. 

Universal and unrestricted competition of each 
nation to undersell the other in some particular 
line, and therefore secure the world's trade for that 
speciality, is the ideal of the Cobdenite free-trader, 
but it is not of the trades union or labour organizations. 

The free importation of foreign goods means 
cheap labour in England, but trades unions would 
have dear labour in England, so that a Customs 
Union, and not free imports, is the policy dictated 
by their interests. The working classes would, of 
course, resist the idea of a heavy tax on all corn 
coming into England, such as existed before the 
repeal of the Corn Laws in the interest of the land- 
owners. But what is now suggested is the pro- 
tection, not of the landowners, but of the trade of 
the country, in which every working man is m- 
terested, to afford more employment, thereby 
doing away with the unemployed, and saving 
that shameful waste of wealth which now takes 
place through our paying others to do what 
we could perfectly well do ourselves. To be 



( 22 ) 

self-sufficing is the ideal ol' us advocates of the 
Customs Union. 

And this brings me to the next division of my 
subject — the nationality aspect. I have said above, 
the instinct of nationality repudiates Free Trade. 

I will explain what I mean by this. 

There are two ideals. 

The ideal of the Free-trader is to take up a 
speciality and lick creation at it. 

The ideal of the Protectionist is to make his 
nation self-sufficing, like the typical Athenian of 
Pericles, who was more than any other dvrap/cy^s. 

And (as has been pointed out very ably in a most 
readable little book, which had a great circulation 
in the North, " Merry England ") what a terrible 
thing for our country it would be if this hideous 
ideal of the free-trader were really to be carried 
out, and we were to become the workshop of the 
world ! 

Fancy our country, from Land's End to John 
o' Groat's, one hideous repetition of the Black 
Country of Staffordshire, or the black manufacturing 
district of north-enst Lancashire ; and fancy our 
country and agricultural population wiped out, and 
all having to work like white slaves, and only having 
their foreign food supplied to them from hostile 
countries on the couditiun that they could make 
their speciality cheaper than any other nation, 
because they were willing to work longer hours than 
any other ! But as I have already pointed out, our 
working classes have already said Xo, through their 



( 2:5 ) 

organizations, to this inviting Cobdenite picture, and 
the great industrial centres are notably becoming 
protectionist. 

But why have all the nations of the earth repu- 
diated Free Trade, and what is the truth which 
underlies this consensus? To ttoXXoIs dp-qixeuop 
aX-qdovq tlvo^ ju-ere^et — there must be some reason for 
this universal repudiation of so specious a proposal. 

The fact of the matter is, that at the present 
moment there is no such thing as Free Trade. 
Free Trade means unhampered trade, and trade is 
everywhere hampered by duties. 

No one desires real free trade more than I do, 
but I understand by it free admission into the 
markets of other nations, and not giving other 
nations that privilege, which seems to me like 
the ostrich, which, we are told, buries its head 
in the sand, under the idea that it is concealing 
itself. 

The advantage of free trade is in the receiving, 
not in the giving, and when Cobden advocated it 
half a century ago, he did not overlook this point, 
but honestly believed that other nations would 
follow our example, and do what Avas so eminently 
for the benefit of that abstract good — universal 
trade. A river would run faster if there were no 
dams in it, but the dams are of inestimable advan- 
tage to those who live along it. So it is with trade. 
Trade would benefit by the adoption of universal 
free trade, but many nations, as nations, would be 
ruined. 



( 24 ) 

And Cobden, in his prognostic that in ten years 
every nation would adopt free trade, ignored one 
most important point, i.e. that free trade, whilst 
being the ideal from a commercial standpoint, is in 
some cases prejudical from a national point of view. 

Nationalism is (to borrow a Darwinian term) the 
natural check to free trade, and for this reason, that 
whereas free trade would, if universally adopted, 
commercially benefit the human race probably more 
than any other measure, it would correspondingly 
interfere with the national principle or idea. 
Universal free trade would cause populations to 
gi'avitate towards those centres most favourable to 
each special industry, with the result that each 
industry would be carried on under the most favour- 
able conditions, and that the human race would 
benefit by having all the products of the earth and 
of human industry at the least possible cost. Every 
individual would be proportionately richer, and the 
working classes would have better opportunities of 
earning what they require. But what would become 
of the national idea ? 

Take Germany, for instance, hemmed in by two 
formidable powers, France and Russia, of whose 
intentions she is always apprehensive. As soon as free 
trade was universally adopted it is probable that, 
tlie protection laws for her home industries being 
removed, a part of her population would emigrate to 
some country where the conditions of agriculture 
or manufacture were more favourable. 

The result of this would be a diminution in the 



( 25 ) 

men capable of undertaking military service and 
fighting in iier battles for the existence of that 
political unit, the Fatherland of Germany, which 
the national idea teaches them to look upon from a 
political point of view as the supreme good. 

Thus it is obvious that the instinct of national 
preservation militates against the adoption of 
universal free trade. The desire is felt to foster 
home industries with the object of keeping as many 
persons as possible employed within the boundaries 
of the political unit capable of defendmg that national 
unit in case of war. 

And this brings me to the last and perhaps the 
most important and interesting branch of the subject 
— the Imperial and Colonial aspect of the question. 

The British Isles, which constitute the entire area 
we have at present for free trade, are manifestly 
insufficient for the volume of our trade. In the 
British Empire, however, a sufficient area would be 
found which might even grow. And in this 
establishment of free trade we should not have the 
national idea in conflict with us. We should, on 
the contrary, have it acting in our favour, for the 
instinct of national preservation, instead of taking- 
fright lest there should be a loss of population 
towards centres outside the national boundary more 
favourable to certain industries, would be gratified 
by the prospect of a protected area capable of 
affording sustenance for an overwhelming military 
force. 

English statesmen now recognize that they must 



( 26 ) 

bestir themselves to fight for markets for English 
goods. If at the present day there is one cause 
which is more worth fighting for between nations, 
whether by force of arms, or, still better, by 
diplomacy through the offer of reciprocal commercial 
advantages, it is, in my opinion, the right of free 
markets. For in the present day, when the 
financial question seems to be at the root of our 
whole political and social life more than it has ever 
been before, this right of open markets appears to be 
the greatest benefit that one nation can confer upon 
another, or the greatest injury whicli, by being- 
withheld, one nation can inflict upon another. And 
yet England, at the very zenith of her power, quietly 
acquiesces in a state of things irretrievably damaging 
to her enormous accumulated capital, whether sunk 
in land or manufacturing industries. She offers for 
nothino; to the foreio-ner an inestimable benefit, the 
finest market in the world, for the use of which she 
could get a very high price from foreign nations, the 
price of entrance into their markets of our com- 
modities, or at least a reduction of their tariff. By 
giving this market away gratis ^v^i are doing a wrong 
to our o^vn peoj^le. 

For I am convinced that Avhereas the spectacle of 
an isolated country not even enjoying Free Trade with 
her Colonies, and suffering IVoiii tlic liiilhiciiiation of an 
imaginary free trade, was calculated to make other 
nations hesitate to adopt free trade ; a large con- 
federacy joining together to practise real free trade 
on a workable scale, would, by the quick adhesion of 



( 27 ) 

smaller units, soon assume such proportions as might 
possibly ultimately result in the universal adoption 
of free trade. 

Thus it will be seen that even from the abstract 
and theoretical standpoint of the ideal free-traders, 
this policy of a Customs Union might in the end 
bring about the adoption of this universal free 
trade which they have been taught is so much to be 
desired in the interests of the whole human race. I 
do not myself think it will ever come about, or is any- 
thing more than a pious aspiration ; but I honestly 
believe that our taking up arms to fight and join the 
melee to win fair terms for our workers, is not only 
imperatively demanded as a duty to our own, but 
also is the greatest means we could take towards the 
bringing about of universal free trade. 

The full evil of our policy of allowing our trade 
to be taken away from us by foreign tariffs, without 
retaliating and demanding reciprocity, has not yet 
been felt, and will not be as long as we can go on 
acquiring fresh territories as markets to take the 
place of those we are always losing. Thus the full 
mischief of our false system is not yet realized. 

But in xime we must exhaust the area on the 
habitable globe disposable for us to annex for this 
purpose. And in view of this and of the fact that 
these territories have been acquired at a vast cost 
to the British taxpayer (computed at some 2000 
millions : National Debt, 862 millions — 680 millions 
still owing ; public loans, 700 millions ; private 
advances, 450 millions at least), and in view of the 



( 28 ) 

fact that these vast territories are maintained by the 
British taxpayer at an annual cost of some 
56,000,000/. (for Army and Navy 31,000,000/., for 
National Debt 25,000,000/.), it seems unjust to him 
that he should enjoy no preference in those markets 
which he has created over foreign nations who deny 
him theirs, and whose hostility necessitates the above 
expense in acquisition and maintenance, and who 
keep what territory they can get as a peculiar market 
for their trade. 

It is a manifest injustice that when, after great 
sacrifice in money and lives, we acquire and develop 
and open out to trade vast tracts of land, we should 
do so for the foreigner, and throw these new countries 
open to his trade on equal terms with our own 
people, whilst at the same time he is excluding us 
fj'om every inch of territory he can. He is prac- 
tically playing Avith us on the principle of " Heads I 
win, tails you lose." 

A comparison of exports and imports with the 
two great protectionist nations, shows that whereas 
they become less indebted to us by manufacturing 
their ovm requirements, we become more indebted 
to them, and so the advantage they gain is not 
counterbalanced by any loss to them of export trade 
with us. For whereas in 1865 we exported to 
Germany 11,541,540/. more goods than we imported 
from them, in 1898 we exported only 1,590,643/. 
more than we imported from them, being a gain to 
them of 9,950,897/. Whilst with regard to France, 
our imports from them, which in 1 865 only exceeded 



( 29 ) 

our exports by 6,270,159/., in 1893 exceeded them 
by 23,862,500/., or an improvement for them in the 
balance of 17,592,431/. The figures being : — 

Imports into United Kingdom. 

18G5. 1893. 

£ £ 

From France . . 31,625,231 . . 43/i58,090 

„ Germany. . 16,611,852 . , 26,364,849 

Exports from United Kingdom. 

£ £ 

To France . . 25,355,072 . . 19,795,500 

„ Germany . . 28,153,392 . . 27,955,492 

The rapid growth of France, Germany, and the 
United States is still further illustrated by the 
following quotation from the Minority report of the 
Royal Commission on the Depression of Trade, page 
114, paragraph 51 : — 

"In the eight years from 1876 to 1884, France, 
Germany, and the United States increased their 
annual consumption of wool by 325,000,000 pounds, 
or allowing for the estimated diminution of the 
home production of France and Germany, 
295,000,000 pounds, that is, 45 per cent. ; whilst 
ours increased only by 12,000,000 pounds, or 3^ per 
cent. The simultaneous progress of the silk manu- 
facturer in the United States and decay in this 
country, during the last twenty or twenty-five years, 
is not less remarkable, especially Avhen taken in 
connection with our quadrupled import of silk 
manufactures. 

"It is equally important to observe that whilst 



( «o ) 

foreign tariffs have operated to limit our export of 
the three classes of textiles just named, they have by 
no means prevented the protectionist nations, who 
manufacture under their shelter, from immensely in- 
creasing the value of their exports of the like manu- 
factures to this country during the same period, in 
spite of the great fall of prices, and of the fact that 
much labour and machinery connected with those 
industries in the United Kingdom were all the while 
wholly or partially unemployed. This is illustrated 
by the extraordinary fact that, whilst the value of 
our exports of worsted and woollen manufactures in 
the five years 1880-1884 exhibited, as compared 
with the five years 1865-69, a decrease of 43'1 per 
cent., the value of our im])orts, comparing the same 
periods, showed an increase of no less than 214*9 per 
cent. These facts confirm the evidence given before 
us by witnesses connected with various industries, 
that in the case of countries like Germany, possess- 
ing in an ample measure the population and other 
resources required for successful manufacturing 
enterprise, the adoption of a system of import duties 
on manufactures, and even on primary articles of 
food, has not disqualified them from successful and 
growing competition with us in the home and 
Colonial as Avell as in neutral markets." 

The following quotation is from a speech of Mr. 
Cecil Rhodes in London, January 18th, 1895 : — 

"Tlicre arc 60,000,000 of your people in tlic 
United States. You created that country ; that is 
your production, if I may call it so. They adopted 



( '^1 ) 

Protection, and they cannot get rid of it now. What 
is your trade with the United States and its 
60,000,000 people ? Your exports there are about 
24,000,000/. per annum. In South Africa and 
Egypt we have only 600,000 whites, but your 
exports there amount to 20,000,000/. You have 
15,000,000/-. with the Cape and Natal, almost 
entirely British goods, and 4,000,000/. with Egypt, 
where you have a fair chance for your goods. You 
are doing 20,000,000/. with these two small depen- 
dencies, as against 24,000,000/. with another creation 
of yours which has shut your goods out, and where 
there are 60,000,000 of your own people. If they 
gave a fair chance to your trade you would be doing 
150,000,000/. with the United States — to your advan- 
tage, and the advantage of the American people." 

These statistics show us what much better cus- 
tomers our Colonies are to us than foreign countries, 
and therefore the true policy for us to pursue is by 
favourable treatment to induce emigration towards 
our Colonies rather than to the United States and 
other countries. 

What Ave ought to do is to endeavour to establish 
a larger population of food-growers in our Colonies, 
who will purchase our manufactures in exchange for 
the food we require. 

Then we shall get the full value of the work we 
do, and the foods we make to exchange for the 
means of living. 

I must here quote another passage from Mr. Farrer 
Ecroyd's pamphlet : — 



( 32 ) 

'' What, then, are the capabilities of our Colonies, 
either as customers for our goods or as growers of 
food? In the year 1877 (the last of which I happen 
to have the returns before me), our Australian 
Colonies, with two millions of inhabitants, purchased 
our exports to the value of 1 9,285,7 18Z. ; whilst the 
United States, with about forty millions of inhabitants, 
purchased only to the value of 16,370,814/. In the 
same year the Dominion of Canada (with Newfound- 
land), containing four millions of inhabitants, took 
from us exports to the value of 7,613,547L ; whilst 
Russia, with nearly eighty millions of people, bought 
only to the extent of 4,178,614/. In other words, 
every xYustralian is as large a customer to us as 
sixteen Americans, and every Canadian is better to 
us than thirty-five Russians. Thus, should we 
succeed, by the aid of a differential duty, in settling 
only four or five millions more inhabitants in our 
Colonies, their custom would be as large as the 
whole of our present export trade to the United 
States and Russia combined. 

" Nor need we fear that by the adoption of such a 
policy we should lose any export trade to America or 
Russia which we can retain under the present 
system, or provoke any action on their part which 
will not equally be adopted as matters now stand, 
should they deem it advantageous to themselves. 
The enormous duties now levied by these nations on 
our manufactures were imposed by them in the face 
of our fVcc-trjidc ))olicy, and this may convince us 
that no consideration of reciprocity or Avant of 



( 33 ) 

reciprocity has influenced their actions at all. On 
the contrary, we should probably convert into 
zealous free-traders the carriers, merchants and 
exporters of New York and the Atlantic States, who, 
harassed by the favoured comj)etition of Canada, 
would be anxious to obtain the largest and most 
direct exchange of commodities with this country. 
For from the moment when they should see us 
resolved in earnest to become independent of them, 
the tables would be turned, and the fear of gradually 
losino; their vast trade with Eno;land, who now takes 

O 7 

two-thirds of their food exports, would make them 
instead of ourselves the perplexed and anxious party. 
Amongst other results we might reasonably expect a 
considerable migration of farmers from the remote 
North-Western States into our territories. But it 
would be a fatal error to allow any offer of recipro- 
city, even from the Americans, to turn us aside for 
one moment from the steady pursuit of a policy 
directed to secure the unity and prosperity of the 
whole Empire. Instead of that we ought, without 
delay, to open out and hasten the settlement of the 
best corn and cattle-growing lands in our depen- 
dencies. What some of these are the following- 
extracts will show : — ■ 

"Of the total area of the Dominion of Canada, 
upwards of two million square miles are agricultural 
and timbered lands, and of these the wheat zone 
occupies about one-half. The range of productions 
is extended in grains from barley to maize : in fruits, 
from apples to peaches, grapes, melons, nectarines, 

D 



( 34 ) 

and apricots ; in vegetables, from turnips, carrots, 
and cabbages to the egg-plant and tomato. 

'• North of Lakes Erie and Ontario and the River 
St. Lawrence, east of Lake Huron, and included 
mainly within the province of Ontario, there is as 
fair a country as exists on the North American 
continent, nearly as large in area as New York, 
Pennsylvania, and Ohio combined, and equal, if not 
superior to these States in its agricultural capacity. 
It is the natural habitat of the combing-wool sheep ; 
it is the land where grows the finest barley. It 
raises and grazes the finest of cattle with qualities 
especially desirable to make good the deterioration 
of stock in other sections, and its climatic conditions, 
created by the vicinity of the great lakes, specially 
fit it to gi'ow men. Such a country is one of the 
greatest gifts of Providence to the human race. 

" To develop these resources and the like in other 
portions of our Empire, is the task to which we 
ought at once and energetically to address ourselves ; 
but to do this rapidly in the face of the vast food- 
growing and carrying organizations which America, 
by the aid of our capital, has already got into full 
operation, would 1)0 impossible without the aid of a 
differential duty. The young jDlantatioii will be 
strong ;iii(l healthy enough when full-grown, but it 
must be fenced and sheltered during its infancy. 
And probably this is the best investment possible 
for England lierself, for past experience and the 
clouded future both warn us that, in the absence of 
such legitimate openings fur capital and enterprise, 



( 35 ) 

wc may totally lose, during the next few years, in 
unsound home and foreign investments, in the forced 
idleness of many workpeople, and in the reduced 
Avages of the rest, an amount sufficient to have 
opened out new lands that would sustain a couple of 
millions of people in plenty, and supply half our 
import of corn, cattle, bacon, butter, and cheese. 
What would have been our position in these respects 
at this moment had such a policy been adopted ten 
years ago, and had one or two hundred millions of 
the money now hopelessly lost in foreign loans and 
foreign railway bonds been directed, by the wise 
initiative of Government, to the development of 
our own territories and the growth of our own 
food ? " 

What is the attitude of the Colonies on this ques- 
tion ? They have taken the initiative in the cause of 
commercial federation of the Empire by adopting 
through their representatives the following resolu- 
tion : — 

"Intercolonial Conference at Ottawa. 
" A Customs Union. 

" The Conference, after two days' debate, finally 
passed the reciprocal trade resolution yesterday, as 
follows. It was moved by the Hon. G. B. Foster, 
and seconded by Sir Henry Wrixon : — 

" ' That, whereas the stability and progress of the 
British Empire can be best assured by drawing con- 
tinually closer the bonds which unite the Cjlonies to 

D 2 



( 3G ) 

tlie mother country, and by the continuous growth 
of a practical sympathy and co-operation in all that 
pertains to the common welfare ; and whereas this 
co-operation and unity can in no way be more 
effectually promoted than by the cultivation and 
extension of the mutual and profitable interchange 
of their products, it is therefore resolved that the 
Conference records its belief in the advisability of a 
Customs arrangement between Great Britain and 
her Colonies by which trade within the Empire may 
be placed upon a more favourable footing than that 
on which trade is carried on Avith foreign countries.' " 

Such is the officially-expressed opinion of the 
Colonies. It is surely a fortunate circumstance for 
us that it is our Colonies ■who assert this patriotic 
and sound doctrine, and not that we have to try and 
convince them of it. 

They call upon us to do what is for their interests 
and ours, and if avc do not respond to this call, we 
must lessen ourselves in their estimation as beino: a 
nation wedded to the theories of learned Professors 
of political economy instead of great rulers and prac- 
tical men of business, worthy to wield the affairs of 
a great Empire. AVe have a chance of strengthening 
<»ui- })oliticul connection Avith the Colonies by the crea- 
tion of common commercial interests. If Ave neixlect 
this opportunity Ave shall not leave that connection 
as it is, Ave shall loosen it. This is no party question. 
It is a national, ;ui imperial, a commercial question, 
Avliicli (MiLiht to appeal to the heart of every English- 
jjiaii. a- it <l'K's to the lieart of every English colonist, 



( -57 ) 

which ought to appeal to the understanding of every 
business man, when he sees that, whatever Regius 
Professors may write or enunciate in their poUtical 
economy class-rooms, workshops and factories are 
being shut up, trade and wages being lost to the 
country, by other nations having resolved to destroy 
our trade and to become self-sufficing, whilst the 
British Empire, which, better than any other political 
unit on the globe, could be self-sufficing, and supply 
all its wants, carries on a Quixotic and unnatural 
policy of allowing its own workers and producers to 
be injured and destroyed by hostile tariffs, and still 
continues to benefit these hostile countries by free 
admission, when they have declared commercial war 
upon us. This is a pusillanimous policy, and the 
spirit of every Englishman Avill rebel against it, when 
the free importers say, " We dare not retaliate, other 
nations are too strong for us ; we cannot do without 
their goods." Are they too strong for the British 
Empire ? 

And should the Customs Union be adopted, then 
safe and remunerative investments would al^ound for 
English capital, under the protection of the English 
flas:, and the coincidence would be achieved of 
favourable natural conditions, Avhich make capital and 
labour well remunerated, whilst at the same time 
avoidino; the great drawbacks to the investment of 
money abroad where conditions are now favourable, 
i.e. the uncertain, and even in some instances un- 
trustworthy character of foreign Governments, 
and the loss in every case to the British nation 



( 38 ) 

of the labour-employing aspects of the capital so 
invested. 

By a mistaken policy we have been using our 
capital to de^'elop, by railways and other enterprises, 
the resources and trade of foreign countries in com- 
petition Avitli our oAvn Empire, and to the neglect of 
our Colonial resources. A preferential treatment of 
Colonial investments in the matter of taxation would 
tend to remedy this injury to our trade and working 
classes. 

Railways and telegraphs have made the whole 
Avorld so near together that it is as absurd, in the 
present day, tliat different portions of our Empire 
should be separated by tariff Avails, as it would have 
been a century ago for municipalities within England 
to be deliarred from free commercial intercourse. 

The Colonies ask that the British Empire should 
awake to these changed conditions, and, recognizing 
the spirit of the times in Avliich Ave live, should show 
a broader conception of the national idea, by forming 
a Customs Union for the British Empire. The great 
argument of the belieA- ers in free imports Avas that 
A\'e dare not lift up our heads among the nations of 
the earth to fight, by connnercial treaties, for fair and 
erpial conditions for the goods made by our Avorking 
classes, because Ave Avere too small and too dependent 
upon other nations for our supplies. Noav the 
chance is offered to us by our Colonies to join Avith 
them in a commercial syndicate. 

This is the ""reatest and iirandest idea the Avorld 
has ever conceivccl, and, should Ave adopt it, so far 



( 39 ) 

from being too small to bargain for favourable trade 
conditions in our exchange of commodities with 
foreign nations, we should be stronger than any, 
and none would be strong enough to suffer exclusion 
from a Customs Union embracing so large an area as 
the British Empire. 

If we were bound up in one trading company, we 
should be better able to ask the colonists to help us 
to pay for the vast outlay necessary to keep up a 
fleet adequate to protect our Imperial shipping and 
ports, which it is unfair should fall entirely upon us 
in England. And the objection to our assisting the 
Colonial trade by the subvention necessary to carry 
out the recommendations of the Colonial Conference, 
to have a better service of steamers to improve the 
communication between Australia, Canada, and the 
mother country, would be done away with when we 
felt we were developing an integral part of our own 
trading community, and not a distant part of the 
earth to which we were bound by a political tie abso- 
lutely unsupported by any mutual bond of commercial 
interests. 

Now, the advantage of the Customs Union to us is 
that it tends to help both land and manufactures (the 
two wealth-producing industries) — manufactures by 
a tax (for revenue) on competing imports, land by an 
alleviation of the present intolerable burden of taxa- 
tion in proportion to revenue that would be received 
from the differential tariff. 

But I have been asked what inducement can we 
give our Colonies to join us and take off their tax 



( 40 ) 

against us? The ansTver is, We offer them a pre- 
ference in our market, the best in the world. 

And Ave gain the advantage that, having induced 
them to join us in this United Empire preferential 
trading league, Ave give them a reason for being 
•willing, not merely from sentiment, but from that 
much more cogent and lasting motive, common 
interest, to join in sharing the expense of keeping up 
an adequate navy to guarantee the safety of our 
enormous Imperial merchant marine, and at the 
same time ensure the peace of the Avorld. 

That the moment is opportune for the carrying 
out of this policy Avill be seen from the folloAving 
Avords of the late Prime Minister of Canada, Sir John 
Thompson, after a paper delivered at the Imperial 
Institute, on December 11th, 1894, by Sir Henry 
Wrixon on the National Significance of the OttaAva 
Conference : — 

" Xothing could have exceeded the enthusiasm 
aroused upon the arrival of our felloAv-colonists, and 
of Lord Jersey as representing Her Majesty's Govern- 
ment. It Avas felt by our people that in Australia, 
in XeAv Zealand, and the Cape of Good Hope, millions 
of (.ur fellow-colonists, interested as Ave Avere in the 
development of the Empire and the mutual trade of 
the Colonies Avith each other, had been all these years 
Avithout the slightest touch or approach of kinship, 
and that the moment they arrived an opportunity 
liad coinc to reverse that state of things, and to shoAV 
rlic Avoilil iliat AV(! Averc a united people." 

]W t]\'\< policy Ave should l)riiii: back a ofolden acre. 



( 41 ) 

for should we not regain an unquestioned commercial 
supremacy? Should we not be able to carry on 
every industry in that part of the globe most favour- 
able to its success, where nature was most aiding, 
and yet do so with our own people, paying tribute, 
out of their earnings, out of their energy and enter- 
prise, to no foreign sovereign ? 

This would help our labouring classes. For the 
expansion in our home trade which would certainly 
result from a preference given to our products 
throughout the Empire, an increased demand for 
labour, which would result from this expansion of 
our trade, would tend to make labour more valuable, 
whereas the present curtailment of our trade, by 
hostile tariffs in our Colonies and elsewhere, tends to 
prevent the natural rise in wages which such in- 
creased demand would bring about — the less trade, 
the less profits, and therefore the less to spend on 
wages, and the less capital accumulating for the 
foundation of further labour-emj)loying and wage- 
giving enterprises in England. 

I am convinced that the same difficulty will arise 
in preserving the stability of our connection with the 
other Colonies, as occurred with America when com- 
mercial interest found itself opposed to political 
sentiment. Let us, therefore, make this tie with 
our loyal and attached Colonies to keep them with 
us, and in all probability (though it is not necessary) 
this will be followed by the rebinding of a commercial 
tie with tlie United States more enduring than the 
old political one. 



( 42 ) 

This is a grand religion ; it is a real, not a visionary 
Free Trade, such as Cobden's, depending upon an 
unrealized hypothesis that others would follow us. 
Here are the others, our Colonies, our own kith and 
kin, ready to join us, and nothing but the most crass 
ignorance, the most jDurblind folly, can prevent us 
from seeing how excellent is the opportunity, how 
fatal to us would be the neglecting of it. As foolish 
and as fatal would such a rejection of their overtures 
be as the belated policy which estranged from us the 
United States in the last centur}'-. 

" The statement * that our excess of imports over 
exports is due to the largely increasing income accru- 
ing from our foreign investments, Avhilst satisfactory 
to financiers as accounting for the balance of trade, 
is by no means calculated to reassure our working 
classes. 

" It will certainly, and very justly, alarm them to 
learn that our imports are acquired more and more 
in jDayment of rent and interest due from abroad 
to uvir wealtliier classes, and less and less in ex- 
change for the productions of their own industry. 
And they will judge what must be the effect of 
such a movement as that upon our industrial popu- 
lation ill the long run." 

I should hope that tlie most advanced Free Trade 
enthusiast would not wish us to become dependent 
on this source of revenue. 

For the British manufacturer (i.e. employer of 
labour other than agricultural) there can be no doubt 
* From Mr. Ecroyd's pamphlet. 



( 43 ) 

that this scheme as laid down here Avould be most 
beneficial, because the present state of things is for 
him the worst possible. 

The trades union puts this dilemma before him 
— either raise our wages or stop work. Stopping 
work means letting capital which he has sunk 
in his business lie idle. And if he has had to 
borrow a portion of this capital on mortgage, as 
frequently happens, he is bound to pay a certain 
interest on it inexorably. The other alternative, 
however, of the fatal dilemma is equally disastrous, 
owing (1) to the severity of foreign competition in 
the Colonies and neutral markets ; (2) to the 
fact that owing to the fine exacted through foreign 
Customs duties the margin of profit is reduced to a 
minimum. 

Thus he is sandwiched between the Trades Union 
and the Protective Tarifi". The one inexorably 
raising the cost of i3roduction, the other as surely 
depressing the price to be obtained for the product. 
Since the manufacturer lives on the margin between 
these two, which in many industries has already 
disappeared and is in others fast vanishing, it is 
obvious that his interest is in the establishment of 
this Customs Union, Avhich Avill mitigate this im- 
possible state of things. 

This state of things not only ruins the English 
employer, but tends to lessen employment thereby, 
for he is intimidated from investing further capital 
in renewing his machinery in industries which are 
no longer profitable, and is attracted to invest it 



( 44 ) 

abroad under the shelter of a protective tariff, and 
thereby intensify the severity of foreign competition 
against his OAvn country. 

Next let us consider the Agricultural interest at 
home, and how they would be likely to look upon 
this scheme of the Customs Union. 

Considering the vast loss to the landed interest 
through the deflection of our food-custom from them 
to the foreigner, both landowners, tenant-farmers 
and agricultural labourers must sympathize with 
a policy which, whilst in no wise protecting the 
English farming interest, would yet tend to put 
him on a more just and equitable basis as regards 
taxation. 

Namely, to relieve him of the excessive weight of 
direct imperial taxation which he was well able to 
bear at a time when he was enriched by j^rotection, 
but from ^vhich noAV that he no longer enjoys that 
benefit it is only just he should be relieved, and put 
on a more equal basis with his foreign competitor. 
AVhilst at the same time a preferential market 
would be afforded him in the Colonies for any 
speciality in the way of prize stock which, owing to 
climate or other conditions, he might be able to strike 
out to meet some requirement. 

AikI riii;i]lv, let lis look at the Customs Union 
from the point of view of tlie Colonies. At the 
present time, owing to the facilities of carriage 
intensifying universal competition, and the abundance 
of commodities due to the constant improvements in 
labour-saving machinery, it is not the difficulty of 



( 45 ) 

getting the requirements of life, but the procuring a 
market for those commodities — that is the prevailing 
anxiety of everyone, workman or employer. 

And therefore there can be no doubt that the 
arrangement of the scheme as here formulated would 
appeal to every class of the community in every State 
in the Empire. 

One more word with respect to the Imperial 
aspect of the question, and the necessity of the 
Imperial federation of the English-speaking nations. 

The great merit of this scheme in my judgment 
is, that it is not only commercially sound and im- 
perative, but it is equally necessary to the consolida- 
tion of the British Empire, consisting of so many 
nations and languages, into one united and self- 
sufficing Empire, 

Self-sufficing not only in respect to being able 
to supply its own Avants, but also in being able to 
hold up its head among the nations of the world, 
and speak with a voice Avhich no one dare gainsay 
on behalf of its gigantic trade and its toiling 
millions ; and when it has spoken, to be able 
to enforce its word without seeking help from 
outside. 

This is what I understand by a self-sufficing 
Empire. 

The Customs Union makes for this end in 
a way that no other measure could : and it is 
not a matter where by action we can gain some 
great benefit, and by neglecting to act we do no 
harm. 



( 46 ) 

If Avc do not seize this golden opportanity, and 
respond to the invitation of the Colonies to Imperial 
unity, we shall, in my opinion, break up the Empire. 

And I Avill explain why I believe this would 
follow a rejection of the proposals of the Ottawa 
Conference, 

Take, for instance, our two greatest colonies, 
Canada and Australia, and consider what will surely 
happen if we do not at this critical juncture in the 
history of the Anglo-Saxon race bind them indis- 
solubly to us by a commercial tie. 

They will not always be merely sending us food 
and raw materials. 

They will in time develop manufacturing industries 
similar to our own, and be compelled by the tyranny 
of foreign protective tariffs, in order to win fair 
terms for their own industries, to differentiate 
against the mother country, and so become protec- 
tionist against us. 

Lord Farrer, in speaking on this question of the 
Ottawa Conference, enunciated that if the Colonies 
wished to draw nearer the ties Avhich bound them to 
the mother country, they must do so by approxi- 
mating to our free-trade policy. 

" If," lie says, " Imperial unity is to be strength- 
ened by commercial arrangements, those arrange- 
ments must be in the direction of free trade, and 
not of protection ; by the reduction of protective 
duties in the Colonies, and not by the imposition of 
difiereiit ial diilics in (Ji-cat liritain." 

This sounds verv iinc. Ijut the Colonies are not 



( 47 ) 

going to immolate themselves upon the altar of an 
abstract idea. And never having bowed their heads 
before Cobden, I do not think they are likely to 
become converts at the present day in the face of the 
universal consensus of the civilized nations of the 
world. 

Free trade would bind us to the Colonies ; but 
free trade with ourselves, not with foreio'ners. 

And I have already pointed out that the Colonies 
cannot do without revenue duties. 

The Colonies are the youth of the Empire ; they 
keep us up to date, and the old country from wearing 
out and becoming obsolete. We cannot associate 
ourselves too closely with them. 

These Colonies, like children, will not always be 
young. They will not always lean on the support of 
the mother country. Like the United States, they 
will one day be able to stand alone. 

I am not one of those who say, " It is inevitable ; we 
must lose them as we have done the United States." 

I feel rather that an awful responsibility rests 
with us of the present generation, to whom in this 
privileged age has been entrusted the task of 
shaping the destinies of our race. 

And it is just such bigoted refusal to consider 
their interests as lost to us America that would, I 
believe, ag-ain lose us what now remains. 

Let us choose the better and nobler path, and 
keep this mighty Empire not merely as something to 
be proud of, but as a special and peculiar market for 
the toiling millions of our people. 



( 48 ) 

If we let it go, we lose our command of the sea 
through the coaling stations. We lose, instead of 
being able to regulate, the markets of the Avorld. 
We lose a population of 280 millions, nearly ten 
times that of the mother country, and able under 
Imperial federation (realizable through the Customs 
Union) to afford an army and navy capable of 
placing our trade beyond the fear of war. 

The wealth and population of our Colonies is 
nothing to what it would be unde]- a sound fiscal 
policy ; but even as it is the mutual inter-dependence 
of our commercial supremacy in trade, and our Im- 
perial ascendency in politics, is abundcintly evident. 

And I for one believe that the nations (were we 
either divested of our Empire through loss of trade, 
or of the Avealth necessary to defend our Empire 
through the loss of our union with Colonies) woidd 
not allow us to exist in peace as a second-rate power, 
shorn of our greatness, pitiable as such a position 
would be to our pride. 

But there is one suggestion which I cannot refrain 
from putting forward, and Avhich is to my mind the 
most useful practical step Avhich could be taken 
towards bringing within the domain of practical 
politics this most desirable consummation, and 
thereby bringing witliin a reasonable prospect of 
realization the resolution of the Colonial deleirates at 
Ottawa. 

I mean the appointment of a Royal Commission on 
our fiscal policy, which should inquire into : 

1. ('() The effect upon our trade of foreign 



( 49 ) 

protective tariffs and bounties. In support of this 
I quote Minority Report on Depression of Trade, 
p. 138. 

" The most conspicuous, we do not say the most 
important, case is that of sugar bounties. The 
abolition of these bounties is admitted to be 
desirable, for it has been the object of repeated efforts 
on the part of the Foreign Office. So long as the 
bounties are maintained, therefore, it is evident that 
the imposition of a countervailing import duty must 
be desirable. Its effect would be to restore to the 
producers of sugar in this country the just right 
of competition on practically equal terms, and to 
transfer to our own Exchequer the export bounties 
given by foreign nations. The position of the 
British consumer would be the same as if we had by 
negotiation obtained an equivalent reduction of the 
bounties, whilst in his quality of tax-payer he would 
be a gainer by the diversion of foreign money into 
our Exchequer, so long as the bounty-receiving 
importations continued. A countervailing duty of 
one farthing per lb., or 2s. Ad. per cwt., on all foreign 
refined sugar and raw beetroot sugar would sub- 
stantially effect the purpose." 

The bounties and subsidies now given by several 
foreign countries, on the building and working of 
ships of their respective nationalities, have probably 
not yet produced their full effect on the interests of 
our shipbuilders and shipo"\vners. It is clear, how- 
ever, that they cannot but suffer by being exposed 
to subsidized foreign competition. 

B 



( 50 ) 

Value of our imports of fish : 

£ 
In five years, 1870-74 .... 4,323,910 
1875-79 .... 7,561,597 
1880-84 .... 10,429,262 

So large and rapidly increasing an import, whilst 
the fisheries on large sections of our own coasts are 
undeveloped, and the people suffering for want of 
employment, is a matter which we think demands 
attention. 

Sir Thomas Brady, inspector of Irish Fisheries, 
remarks, under date 2Tth September, 1886 : " There 
were over 8000 tons of salted fish imported into 
Ireland last year ; treble the quantity might and 
ouglit to be exported." 

Also Mr. George Auldjo Jameson's report (ibid.) : — 

" These diplomatic eflbrts have failed ; the question 
therefore which those Avho continue to suffer from 
these bounties have presented to us is whether 
legislation can effect what has baffled diplomacy. It 
is tills a|)pc*al for legislative aid which the evidence 
shows is by many so keenly resented ; yet if diplomacy 
was right in its object, how can legislation directed to 
the same purpose be wrong ? Is it only the method 
that is obnoxious ? 

" The evidence before us su^iplies proof that the 
system so in jiii'ious to one industry threatens to affect 
others. 

" Shi])l)uilding is already subjected to attack, and 
there are other industries far more vulnerable which 
^\■ould certainly succumb if subjected for five years 



( •■il ) 

to the treatment whicli lias proved so fatal to 
sugar. 

" I am further of opinion that the Report is 
defective in failing to point out that it is only a 
question of time when this system of bounty, if 
persevered in, although at present it seems to injure 
only the industries and apparently benefits the 
consumers, will come to injure the latter ; the astute 
politicians of foreign countries, who for the present 
deem it advantageous to tax their citizens in bounties 
which enrich our consumers, are not likely to con- 
tinue that policy after it has effected its purpose, and 
the industries have been transplanted from this 
country to theirs. When that is done, the same 
ingenuity which has thus accomplished its purpose 
will readily devise a method of making the British 
consumer recoup to the foreigner the sacrifices of the 
past ; and it will be vain to expect British capital, 
proverbially timid and now made justly distrustful, 
to re-embark in an enterprise which the British 
Government was impotent to defend. 

" On the other hand, I think our Report ought to 
have recorded in very distinct terms that the 
evidence before us had shown that these foreisrn 
bountieshave proved highly injurious to one important 
industry ; that there is evidence of their tendency to 
extend them so as to affect other industries ; that 
they are regarded by a large section of the industrial 
community as fraught with danger ; that if per- 
severed in and extended, these bounties may prove 
injurious to other industries and ultimately to the 

E 2 



( 52 ) 

consumers also; that the efforts hitherto made to 
induce foreign nations to abandon this system have 
proved abortive ; and that the adoption of some 
method more efficacious to accomplish that purpose 
is a duty imperatively imposed on the Government." 

(6.) And especially in regard to the depression of 
profit rather than volume of our trade (due to the 
necessity to compete in markets where these tariffs 
have to be paid) to carefully consider the statistics 
of our foreign trade, subject to the following con- 
siderations contained in Minority Report, pp. 107 
and 108 :— 

" Attempts to indicate the condition of our 
industries and to measure the growth of our pro- 
ductive capacity by the total value or volume of our 
imports and exports are necessarily misleading. For 
everything depends upon the changes in their 
character and the particular direction of their 
gro^vth. 

" All increased imports of agricultural produce, 
consequent upon the withdrawal of labour from the 
cultivation of our own soil, the deterioration of its 
condition, and the diminution of its produce, and all 
additional tonnage of shipping employed in carrrying 
such imports, are indications not of the growth but 
the decay of our productive capacity. 

" So are all imports of manufactures, of what- 
ever kind, which might have been produced at 
home by the employment of labour and resources 
which have remained unemployed or inadequately 
employed. 



( 53 ) 

"So are all exports of coal, machinery, and instru- 
ments of industry, which might have been employed 
at home in the production of food, or manufactures, 
or other commodities, imported under the conditions 
just described. 

" For imports of such articles can only be advan- 
tageous on one condition, viz. that all the labour 
which could have produced them at home is fully 
employed in some equally profitable work. Of this, 
however, we have no evidence, but much to the 
contrary. 

" On the other hand, the larger our imports of those 
articles of food and other commodities, which either 
could not at all or could not legitimately be pro- 
duced at home, and the larger our import and 
retention of the raw materials upon which our 
industries are to operate, the stronger the proofs of 
the prosperity of those industries and the increase of 
the national wealth," 

2. (a.) To consider the effect upon our Home 
Trade of the loss of purchasing power of all classes 
interested in agriculture, and consequently to the 
home market, their principal customers. 

Cp. Minority Report, p. 124, par. 81 (ibid.) : — 

" There can be no doubt that the demand for our 
productions has been considerably restricted by 
various influences, both at home and abroad. 

" First, as regards our home market. We have, 
as above pointed out, suffered a serious loss in our 
purchasing power, by reason of the deficient or 
unremunerative character of the produce of the soil. 



( 'o4. ) 

Sir James Caird estimates the loss in recent years 
of the purchasing power of the classes engaged in, 
or connected with, agriculture, at -42,800,000/. per 
annum. This amount has been withdrawn from the 
market in which it was formerly spent, and cannot 
fail to have had an important influence upon the 
demand for manufactured goods. This, we fear, 
must be reckoned among the permanent elements of 
the depression." 

(&.) And especially to consider the loss to the 
wealth of the community, through the diminution 
of stock kept on the land (owing to the undue 
incidence of taxation, coupled with the unfair 
foreign competition favoured by exemption there- 
from, and the consequent disinclination of capital to 
invest itself in raising English land to its full pro- 
ductiveness), and through the increased severity of 
that competition due to the attraction of English 
capital and labour to foreign countries to benefit by 
a protected area and the desire to escape the evils of 
exclusion. 

Cp. Minority Report (ibid.), pp. 141 and 142, 
paras. 136-138:— 

" It is a striking fact that during the j)ast twenty 
years 67 per cent, of our emigrants have gone to 
the United States, and only 21^ per cent, to our 
Colonies. Tlie more extreme protectionist policy of 
the United States, so far from repelling immigrants, 
has operated as tin effectual bribe to both capital 
ajid Ial)(;ur, by hold inn- out the inducement of higher 
prices and liigher wages. 



. ( 55 ) 

" It would be an act of suicidal folly on our part 
to attempt to counterwork these influences by a like 
system of enormous import duties, designed to raise 
the price of commodities for the advantage of home 
producers. We have a far better and more effectual 
remedy at command. A slightly jDreferential treat- 
ment of the food products of India and the Colonies 
over those of foreign nations would, if adopted as a 
permanent system, gradually but certainly direct 
the flow of food-growing capital and labour more 
towards our own dependencies, and less towards the 
United States than heretofore. 

"When it is noted that in the year 1884 the Aus- 
tralian colonies, with only 3,100,000 inhabitants, 
purchased 23,895,858/. worth of our manufactures, 
whilst the United States, with about 55,000,000 
inhabitants, purchased only 24,424,636/. worth, it 
will be apparent how great would be the effect of a 
policy which should lead to a more rapid peopling 
of the Australian colonies, in giving further employ- 
ment to our working classes at home, and thus 
increasing the healthy activity of the home trade, 
as well as the import of raw materials for our various 
industries to operate upon. On the other hand, it 
must be pointed out that the growth of our colonies 
in population, wealth, and the other requisites of 
successful manufacturing enterprise, and the ne- 
cessity felt by them of counter-bidding to some 
extent the bribe which the high tariff of the United 
States offers to capital and labour, must operate to 
convert gradually the revenue duties of the Colonies, 



( 50 ) 

Avhioh now permit so large an import of British 
manufactures, into protective duties, which will 
seriously restrict that import." 

3. To consider the feasibility of any legislation to 
counterbalance the destructive action of such pro- 
tective tariffs and bounties on our industries, and 
especially of a Customs arrangement between Great 
Britain and her Colonies on the lines indicated by 
the Ottawa Conference. 

It is impossible to lay do^vn any hard and fast 
lines as to what should be the exact terms of the 
arrangement between Great Britain and her Colonies, 
one can only indicate the broad lines on which one 
thinks such a scheme would run the greatest chance 
of realization, for the equal benefit of both contract- 
ing parties. The terms would require to be carefully 
discussed in an Im23erial Conference. 

The hopes of those interested in this movement 
have been raised during the past year by the attitude 
taken by the Colonial Minister, Mr. Chamberlain, in 
officially taking up this question. 

The following extract from his speech to the 
Congress of Chambers of Commerce of the Empire 
on June 9th, 1896, is important as marking an epoch 
in our Colonial policy. 

"1 11)1(1 that you are called upon to consider the 
necessity for improving communication within the 
limits of the Empire ; that you are asked also to 
consider the possibility of greater and cheaper 
facilities for inter-Imperial postage ; that you are 
asked to see whctliLT some approach may not be 



( S7 ) 

made to greater uniformity in commercial laws and 
laws regulating inter-Imperial commerce ; and I note 
one Resolution, which comes, I think, from my own 
city of Birmingham, in favour of the creation of 
an Imperial Council for consultation and advice. 
All these proposals are of great and of pressing im- 
portance, but they are, I was going to say, dwarfed 
into insignificance in comparison with other proposals 
which also will be put before you, and which are 
intended to secure the commercial union of the 
Empire ; and it is, I cannot help thinking, to your 
deliberations and to your discussions on these ques- 
tions that the public will look with the greatest 
interest and the greatest expectation, because it must 
be evident to you that if these questions could once 
be satisfactorily settled, all the others to which I 
have referred would follow as matters of course in 
their turn. If we had a commercial union throughout 
the Empire, of course there would have to be a 
Council of the Empire, and that Council would be 
called upon to watch over the execution of arrange- 
ments that might be made, to consider and make 
amendments in them from time to time ; and when- 
ever such a Council is established, surely there will 
naturally be remitted to it all those questions of 
communication, of commercial law, and others, in 
which the whole of the parts of the Empire are 
mutually interested. Even Imperial defence could 
not be excluded from its deliberations, for Imperial 
defence is only another name for the protec- 
tion of Imperial commerce ; and to such a Coun-^il 



( 58 ) 

as I have imagined to be possible tlie details of such 
defence, and the methods of carrying it on, and the 
provisions to be made for it, Avould naturally be 
remitted, and gradually, therefore, by that prudent 
experimental policy by which all our greatest in- 
stitutions have slowly been built up, ^ve should 
ill this way, I believe, approach to a result which 
Avould be little if at all distinguished from a real 
federation of the Empire. That, in my personal 
opinion, is a question Avhich dominates all other 
Imperial interests, and to which everything else is 
secondary, and which is at the root of the problem 
with which we have now to deal. The establishment 
of a commercial union throughout the Empire would 
not only be the first step, but it would be the main 
step, the decisive step, towards the realization of the 
most inspiring idea that has entered the minds of 
British statesmen. . . . We have a proposal by 
British Free Traders, which is rejected by the 
Colonies, and Ave have a proposal by Colonial Pro- 
tectionists, which is rejected by Great Britain. We 
have, therefore, if we are to make any progress at all, 
to seek a third course, a course in which there shall 
be give and take on Iwth sides, in which neither side 
will pedantically adhere to preconceived conclusions, 
in which the good of the whole shall subordinate the 
separate interests of the parts. T admit that, if I 
understand it correctly, I find the germs of such a 
proposal ill ;i llesolution which is to be submitted to 
you (jii behalf (A the Toronto Board of Trade. What 
is that liesulutiun? Again, 1 say, I hope I am cor- 



( 59 ) 

rectly explaining it. That Resolution I understand 
to be one for tlie creation of a British Zollverein or 
Customs Union, which M'ould establish at once Free 
Trade throughout the British Empire, but would 
leave the separate contracting parties free to make 
their own arrangements with regard to duties on 
foreign goods, except that this is an essential con- 
dition of the proposal, that Great Britain shall con- 
sent to replace moderate duties upon certain articles 
which are all a large production in the Colonies. 
AVell, now, if I have rightly understood it, those 
articles would comprise corn and meat and wool and 
sugar, and perhaps other articles of enormous con- 
sumption in this country, which are at present largely 
produced in the Colonies, and which might be, under 
such an arrangement, wholly produced in the 
Colonies, and wholly produced by British labour. 
On the other hand, as I have said, the Colonies, 
while maintaining their duties on foreign imports, 
would agree to a free interchange of commodities 
with the rest of the Empire, and would cease to place 
protective duties upon any product of British labour. 
That is the principle of the German Zollverein, that 
is the principle which underlies the Federation of the 
United States of America ; and I do not doubt for a 
moment that if it were adopted it would be the 
strongest bond of union between the British race 
throughout the world. I say that such a proposal 
as that might commend itself even to an orthodox 
Free Trader. It Avould be the greatest advance that 
Free Trade has ever made since it was first advocated 



( 60 ) 

by Mr. Cobdon, to extend its doctrine permanently 
to more than 300 millions of the human race, and to 
communities, many of which are amongst the most 
thriving, amongst the most prosperous, and the most 
rapidly increasing in the world. And, on the other 
hand, it would open up to the Colonies an almost 
unlimited market lor their agriculture and other 
productions." 

What is required for the realization of this scheme 
of a Customs Union is not a radical departure either 
by the Colonies or by Great Britain from their 
existing fiscal policy, but a modification and revision 
of the Customs arrangements of each, so that they 
may act for the greater development of inter-Imperial 
trade and to the furtherance of political unity and 
defence. The questions of Commercial and of De- 
fensive Federation of the Empire are one, and cannot 
be treated as separate. It is to be hoped that the 
sixtieth year of Her Majesty's reign may be cele- 
brated by the assembling of an Imperial Conference at 
London in which, through the ability and enterprise 
of our Colonial Secretary, the dream of Commercial 
Federation may become a reality. It is certain that 
the war clouds whicli at the beginning of the year 
hung so heavily around the mother country 
liave aroused a feeling of brotherhood throudiout 
the Empire, and of i)rofound loyalty to the person 
of the Sovereign, whicli could not fail to promote 
a determination on the jjai-t of the representatives of 
tiic ICiiipij-e U) iiiiiiiniize all jxjssible points of con- 
flicting interest and to assure to all the benefit of a 
United Empire. 



( 61 ) 

I must recommend all who take an interest in this 
question to read ]\Ir. J. G. Colmer's article in the 
National Review of July, 1896, and also his essay on 
the Commercial Federation of the Empire, which 
can be procured from the offices of the United 
Empire Trade League, St. Stephen's Chambers, 
Westminster, to whose Secretary, Sir Howard 
Vincent, I have been much indebted for information 
on this subject. 

Summary. 

I. Reasons for the Commercial Federation of the 
Empire : — 

(1) If we do not offer the Colonies an inducement 
by preferential treatment of their imports to join us 
in commercial union, they will be forced by the 
tyranny of foreign tariffs into a commercial alliance 
with foreign nations, by which theyAvould differentiate 
against our trade in order to win fair terms for their 
own. Thereby the political connection with the 
Colonies would be endangered. 

(2) The necessity of common action for the defence 
of the Empire. 

(3) The necessity for us to regulate our fiscal 
arrangements so that our trade does not suffer from 
the consensus of foreign nations in favour of Pro- 
tection. 

(4) The alarming growth of foreign, especially 
German, competition in our home, colonial, and 
neutral markets, fostered by the above unfair con- 
ditions. 

(5) The fact that the protection of labour by trades 



( <>2 ) 

unionism postulates the protection of trade, by which 
means alone can the benefits gained by the protec- 
tion of labour in shorter hours and better wages be 
assured to our workers in face of the underselling 
competition of foreign countries where these advan- 
tages are not enjoyed by the working classes. 

Advantages of the Scheme. 

1. Owing to the dispersed situation of the Colonies 
it is not possible to establish a uniform Customs 
tariff throughout (as if the Empire were within a 
ring fence like the German ZoUverein). This scheme 
therefore gives latitude to each Colony to arrange 
its tariff according to the requirements of its situa- 
tion. 

2. This scheme endeavours to approximate as 
nearly as possible to Free Trade within the Empire, 
using the gift of free commercial rights for the 
welding together of the Empire by common interests, 
and preserving the weapon of a differential tariff, 
with the object of compelling foreign nations into a 
more favourable treatment of our export trade to 
them. 

3. The fact that the United Kingdom tariff acts as 
the minimum tariff throughout the ZoUverein, would 
by iiiti'oihu'ii]^- a measure of uniformity give us still 
more leverage in our negotiations with foreign 
powers for favourable terms for the entiy of our 
goods into their markets, since the treatment they 
gave us would, through our differential tariff, regulate 
the treatment of their exports to the whole British 
Empire. 



... ( 63 ) 

4. It does away with the objection mentioned by 
Mr. Chafnberlain to the Canadian resolution, that the 
uniform tax therein proposed on all foreign imports 
into the Empire would be unequal in its incidence, 
and fall more heavily upon the United Kingdom. In 
this scheme, however, the entire proceeds of the 
revised Customs of each Colony would still be paid 
to and administered by the Treasury of that Colony. 
The Council of the Empire would decide what was 
the fair contribution to be paid by each to Imperial 
defence, but each- would be at liberty to raise that 
amount as was most convenient. 

5. The object of this scheme is not to initiate a 
policy of high protective tariffs, but rather to arrange 
such a re\asion of home and Colonial Customs tariffs 
as will help on the trade of our Colonies and our- 
selves. But the mere granting of a preference on the 
present dutiable articles in our United Kingdom 
tariff would not benefit Canada and Australia, im- 
portant parties concerned, and it has therefore been 
necessary to propose something further, which will 
give them a quid pro quo for the preference they 
are prepared to give to our manufactures. 



THE END. 



LONDON: 
TBtyTKD BT filLBERT AND BIVINQTOK, LD., 

SI. John's hocse, clbhkenwsll boad, b.c. 



UxMViK.Ki^m of CAUFUHNli 



UNIVERSITY OF CALIFORNIA LIBRARY 

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